EO Group Cries Foul over Treatment
The recent whirl of controversies surrounding Kosmos’s shares and that of the EO group in Ghana’s oil fields has attracted some concerns from industry players, who are of the opinion that protracting the issue could spell dire consequences for investment flows into the country’s oil sector.
Issues
- “”No investor would want to invest in an environment where contractual agreements changes with a change of government” Is this just such a case?
Some industry experts that The Chronicle spoke to, who pleaded anonymomity, expressed a general feeling to the effect that if the wrangling between the State on one hand and Kosmos and the EO group on the other is protracted, it could send wrong signals to the investment community who would want to invest in the oil sector.
According to one of them “no investor would want to invest in an environment where contractual agreements changes with a change of government”
A recent leaked charge sheet that mysteriously vanished from the office of the Attorney Generals Department and found its way on web pages of some media institutions in the country, enumerates some criminal charges that the state was considering pressing against the group.
In an earlier interview with The Chronicle, the Attorney General and Minister of Justice, Mrs. Betty Mould Iddrisu, said “Government has enough criminal evidence to press charges against Kosmos and the EO group”
A statement issued by the EO Group said its principals have been subjected to an incomprehensible campaign of character assassination, false allegations of misconduct, and abuse.
Stating the facts that led to their obtaining such a potentially profitable interest in the West Cape Three Points Block, the EO group explained that it entered in*0to contracts with Kosmos, set plainly in writing that in return for introducing Kosmos to Ghana and directing its attention to the West Cape Three Points block: Kosmos and EO Group would each have an interest in the block.
It explained further that under the agreement, Kosmos would pay EO Group an initial fee and would bear some of the exploration and development costs for EO Group’s 3 1/2 % interests in the block, and EO Group would reimburse Kosmos for those development costs.
It said, The Ministry Of Energy , Ghana National Petroleum Corporation, Kosmos and EO Group then negotiated and entered into a Petroleum Agreement for the block that followed a common division of interest, then being used in Ghana, which indicated that the contractors would bear 100% of the exploration and development costs and divide 90% of the production among themselves before tax, whiles GNPC would receive a 10% share of production with no exploration or development costs, as well as certain highly profitable opportunities to obtain an additional share and a supply for the domestic market.
Also, the government would receive the royalty of 5% on production and taxes on the income of the contractors from the project, adding that because GNPC does not have to front exploration and development costs or incur risk, the profitability of the government’s take from this project is far greater than publicly reported.
The group said it acquired the oil block fairly and thus stands to receive the same benefits any business venture can achieve through innovation, dedication and risk tolerance, when the effort results in a huge discovery of petroleum.
“If no oil had been found, they would have been paid only their initial fee for their effort, and no one would have been concerned with their wasted effort. If the discovery was only marginally successful, no one would think the deal was unfair. Because the project was hugely successful, they should not now be second-guessed and punished.”
“The world is watching. The international community hailed our democracy last summer and reminded us that we must abide and honor our legal and contractual obligations. Yet, now we are sending a message to the economic investment community across the globe that Ghana might reject and reform contracts to flow with the shifting political tides. What worthy investor would risk its money and effort by subjecting itself to such uncertainty, such cost, such arbitrariness?” the group warns.
“No one should suffer such treatment for bringing such great benefit to their countrymen, and certainly not innocent men such as the two EO Group principals.” the statement said
Meanwhile Gayheart Mensah , the Communications Director of Tullow oil, one of the development partners in the jubilee field told The Chronicle that the wrangling between government and Kosmos would not have any impact on the jubilee project.
“Every thing is on cause and we are working to produce the first oil in last quarter of 2010,” he assured.
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